{"id":21093,"date":"2024-07-02T10:53:36","date_gmt":"2024-07-02T05:23:36","guid":{"rendered":"https:\/\/www.moneyworks4me.com\/investmentshastra\/?p=21093"},"modified":"2024-07-02T11:00:03","modified_gmt":"2024-07-02T05:30:03","slug":"bansal-wire-industries-ipo-review","status":"publish","type":"post","link":"https:\/\/www.moneyworks4me.com\/investmentshastra\/bansal-wire-industries-ipo-review\/","title":{"rendered":"Bansal Wire Industries IPO Review"},"content":{"rendered":"
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Bansal Wire Industries Ltd IPO Details:<\/strong><\/h2>\n

Opening Date:<\/strong> July 3, 2024<\/p>\n

Closing Date:<\/strong> July 5, 2024<\/p>\n

Listing:<\/strong> BSE and NSE<\/p>\n

Number of Shares:<\/strong> 2.91 Cr shares<\/p>\n

Face Value:<\/strong> Rs 5 per share<\/p>\n

Price Band:<\/strong> Rs 243-256 per equity share<\/p>\n

Issue Size:<\/strong> Rs 745 Cr<\/p>\n

Recommendation: Avoid<\/strong><\/p>\n<\/div>\n

About Bansal Wire Industries Ltd: <\/strong><\/h2>\n

Bansal Wire Industries<\/a> are producers of steel wires with a market share of roughly 2% in the steel wire industry. Their products are used in applications such as the manufacturing of springs, cutting tools, fencing, construction, hardware and automotive, among others.<\/p>\n

Bansal Wires operates from four established manufacturing facilities located in the National Capital Region, three manufacturing facilities in Ghaziabad and one manufacturing facility in Bahadurgarh with a combined manufacturing capacity of 2,59,000 metric tonnes per annum (MTPA). The company is also setting up a manufacturing facility spreading across 32 acres at Dadri and are present in 22 states and 6 union territories through their dealer network.<\/p>\n

Bansal wires also exports their products to countries such Bangladesh, Brazil, France, Germany, Israel, Italy, Netherland, South Korea, South Africa, Turkey, United Kingdom, USA and Vietnam.<\/p>\n

Industry Overview:<\/h2>\n

India produced 74 lakh Tonnes of wire rods in FY23, thus registering an 8.6% CAGR during FY19- FY23. Out of this 74 lakh figure, 56 lakh Tonnes of wires was consumed during FY23, registering a 6.9% CAGR during the period of FY19-FY23. This growth was largely driven by increased Infrastructure spends and growing automobile production. This demand is forecasted to grow by 8-10% between FY23-FY28 to 80-90 lakh Tonnes.<\/p>\n

The demand for steel wires is primarily driven by end-use sectors such as auto, construction, electricity and agriculture. Infrastructure drives the major demand for wires, with their applications in the building and construction industry being limited to fencing.<\/p>\n

\"end<\/a><\/p>\n

Demand Drivers:<\/h3>\n

a) Building and Construction (B&C):<\/h4>\n

The B&C industry corners ~10% of total demand for steel wires, with a forecasted growth of ~6.5% CAGR between FY23 \u2013FY28. This growth is expected to be driven by a governmental focus on affordable housing and increasing demand in rural housing, along with expected improvement in urban housing demand due to increasing commercialisation in Tier 3 and 4 cities. The demand is also forecasted to grow on the back of the growing fencing market.<\/p>\n

b) Infrastructure:<\/h4>\n

The infrastructure segment is the largest consumer of steel wire demand and constituting 20-25% of the total wire demand in India. Within the infra space, roads, highways and railways which include the metros are accounting for majority of wire demand. Furthermore, Increasing awareness and adoption of prestressed concrete in the construction industry is poised to accelerate the LRPC (Low Relaxation Pre-Stressed Concrete) wire industry.<\/p>\n

c) Auto:<\/h4>\n

The automobile industry in India is forecasted to grow at a CAGR of 7.5%-8.5% from FY23 to FY28 and 5.5%-6.5% in FY28-FY33. This demand for steel wires is expected to be supported by spring and steel cord wires used in tyres.<\/p>\n

d) Power cables:<\/h4>\n

This segment, between FY23 to FY28 will grow at 5%-6% CAGR, led by power distribution-led investments, which are expected to be driven by reforms in the power distribution segment.<\/p>\n

\"wire<\/a><\/p>\n

Customer Segments:<\/h3>\n

Bansal Wire Industries produces steel wire and offers over 3000 SKUs (Stock Keeping Units) across its 3 segments. Major customer segments are the Automotive and auto replacement sectors, which contributed a total of 23% of the total sales volume to the company.<\/p>\n

\"customer<\/a><\/p>\n

The company markets and sells its products under the brand name \u201cBANSAL\u201d which commands a strong reputation in the market.<\/p>\n

Business Segment:<\/h3>\n

The company is present in mainly 3 wire segments namely- High carbon wires, low carbon wires and stainless steel wires.<\/p>\n

High-carbon steel wire: <\/strong>This refers to wires which are made from high-carbon steel, which has 0.3% to 1% carbon. These wires are known for their strength, hardness and durability. These are utilized in the manufacturing of springs, cutting tools and other industrial components requiring resilience as well as resistance to wear and fatigue.<\/p>\n

\"high<\/a><\/p>\n

Low carbon steel wire: <\/strong>Also known as Mild steel wire, this wire is made out of low carbon steel which has 0.05% to 0.25% carbon. These wires are known for their ductility, malleability, weldability and are commonly utilized in industries such as power and transmission, agriculture, poultry and construction.<\/p>\n

\"low<\/a><\/p>\n

Stainless steel wire:  <\/strong>This refers to wires made from anti-corrosive alloys which are a combination of iron, chromium, nickel and other elements and are commonly utilized in consumer durables, hardware, automotive, agriculture and other engineering products.<\/p>\n

\"stainless<\/a><\/p>\n

The revenue from these segments are given below<\/p>\n

\"segmental<\/a><\/p>\n

The company derived 16.57%, 14.82% and 11.49% of its revenue from overseas in FY22, FY23 and FY24 respectively<\/p>\n

Purpose of the issue:<\/h3>\n

The issue is entirely a fresh issue amounting to Rs. 745 Crs. Out of the proceeds, Rs. ~546 Crs. will be utilized to pay off debt on the books of the company and its subsidiaries, which were availed primarily for its working capital requirements as well as for setting up its plant in Dadri. Rs. 60 Cr is proposed to be utilized for funding the working capital requirement of the company, which the company has estimated to be Rs. ~627 crs in FY25.<\/p>\n

Positives:<\/h4>\n